Airport privatisation: Govt slashes fund need for projects

The move has raised questions from certain quarters within the ministry itself over the need for putting them up for privatisation. A senior official in the Airports Authority of India (AAI), said, “What is the need of privatising Chennai and Kolkata airports when we have already made huge investments in upgrading them?”

AAI has already invested Rs 2,700 crore and Rs 2,400 crore for expanding capacity and upgrading Kolkata and the Chennai airports, respectively. AAI is sitting on cash reserves of Rs 2,400 crore and, if required, can raise resources to meet planned development works at Chennai and Kolkata (totalling Rs 867 crore).

“Service parameters can be set for each airport and if AAI if unable to meet them, then the government can devise a mechanism to penalise us. There is no need to privatise all airports which have good traffic potential,” the official. said. He, however, clarified that AAI has not written to the aviation ministry yet opposing the privatisation programme.

The move to privatise Chennai and Kolkata airports marks a turnaround for the government, which had in November last year decided to bring in professional firms to merely manage the airports as AAI has already incurred expenses of over Rs 5,100 crore in expanding and upgrading the two facilities. This too when capital requirements and scope of projects have been curtailed at both airports.

The Chennai, Kolkata, Jaipur and Ahmedabad airports, identified for privatisation, are now likely to see fresh investments of Rs 1,839 crore — a decline of 41.6 per cent as against combined capital requirement of Rs 3,150 crore identified for developmental works earlier.

At the Kolkata airport, for one, the private concessionaire would now have to make investments of Rs 375 crore, nearly half of the Rs 700 crore specified when RFQ documents were issued earlier in 2013. The scope of work has been altered with the private concessionaire not required to invest in metro connectivity including covered link till the terminal buildings, constructing a domestic cargo terminal, and modifying the old domestic terminal building at the Kolkata airport.

The private concessionaire selected at Chennai, in the meantime, will have to invest Rs 492 crore as against the earlier requirement of Rs 1,200 crore. The concessionaire will not be required to invest in construction of a new domestic terminal, common-user cargo terminal and multi-level car park. AAI has also slashed by third fresh investments at Ahmedabad airport to Rs 472 crore (from Rs 700 crore) and by around 10 per cent the capital requirement at Jaipur to Rs 500 crore (as compared to Rs 550 crore specified earlier).